8/08/2006 @ 3:12PM

Sprint To Bulk Up Network

Sprint Nextel
announced Tuesday an aggressive investment in a mobile broadband technology called mobile WiMax, aiming not only at cell phones but other devices such as laptop computers, portable videogame consoles and music players.

But given a host of Internet-access competitors ranging from telcos to municipalities planning citywide wireless networks, will anyone use it?

Sprint
chief executive officer Gary Forsee told an audience in New York that the “fourth-generation” network technology could reach as many as 100 million people by 2008, costing the company $2.5 billion to $3 billion.

Initial partners for the network include
Intel
, an early WiMax investor, and network-infrastructure and handset manufacturers
Motorola
and Samsung.

Forsee said Sprint’s WiMax network will be about four times faster than current high-speed cellular data networks. For example, a customer will be able to download a ten-minute movie in less than two minutes, he said.

But will consumers bite? The three largest U.S. wireless carriers, Sprint, Verizon Wireless, a joint venture of
Verizon Communications
and
Vodafone
, and Cingular Wireless, owned by
AT&T
and
BellSouth
, have already invested heavily in “third-generation” networks.

Yet customers still only spend about 10% of their monthly bills on data services — mostly text messages, which use little bandwidth.

Sprint, which has the highest data revenue per month of the major U.S. wireless carriers, boasts that its customers send 30 million photos through its network every month, and that the company has sold about five million songs through its wireless music store.

But that’s paltry compared to the billion-plus songs
Apple Computer
has sold through its industry-leading iTunes music store, not currently available on cellular devices.

Sprint will also see competition from municipal Wi-Fi networks. Chicago, Philadelphia and San Francisco are among the cities planning citywide, high-speed networks, focusing on affordable access. Other companies are also preparing WiMax plays, potentially including satellite companies
EchoStar
and
DirecTV
, as well as Clearwire, led by telecom veteran Craig McCaw.

Berge Ayvazian, chief strategy officer of research firm Yankee Group, is upbeat on mobile WiMax, predicting that “personal broadband” services will be the fastest-growing Internet service in the next ten years. He notes that compatible devices are already being manufactured and that the network infrastructure technology should be ready to go by the end of the year.

Sprint’s ambitious plan comes as shares have recently seen heat from investors dissatisfied with how the third-largest U.S. carrier has integrated its cell-phone network with Nextel’s walkie-talkie-phone network.

But one of Sprint’s prized acquisitions in its $35 billion merger with Nextel, which closed in 2005, was a large chunk of wireless spectrum, the airwaves carriers need to add new services or expand existing coverage, in the 2.5 gigahertz band. Sprint will use Nextel’s spectrum in addition to its own 2.5 gigahertz airspace to create the nationwide WiMax network.

Sprint is also currently upgrading its “third-generation” network to add Nextel walkie-talkie features; with WiMax, speeds will grow even more robust.

Sprint’s announcement comes the day before the Federal Communications Commission auctions off another swath of wireless spectrum. Sprint is approved to bid in conjunction with some of the largest U.S. cable companies, such as
Time Warner Cable
,
Comcast
, Cox Communications and Advance/Newhouse Communications.